Rockets may continue negotiating for CSN Houston, judge rules

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A federal bankruptcy judge granted the Rockets permission Tuesday to continue negotiating on behalf of Comcast SportsNet Houston and set Feb. 4 to hear arguments on the Astros’ motion to dismiss an involuntary Chapter 11 bankruptcy petition filed against the network last September.

U.S. District Judge Marvin Isgur also provided a clearly worded signal indicating that if the Astros-Rockets-Comcast partnership enters bankruptcy, he favors eliminating a controversial clause that requires all three partners to agree on significant decisions.

“The brilliant idea of giving everybody veto power … probably not working out too well,” Isgur said at the latest in a series of hearings involving Houston Regional Sports Network, the parent company of CSNH.

‘Significant momentum’

The unanimous consent rule has been cited as a hangup in efforts to increase coverage for the network, which is available to no more than 40 percent of the area’s 2.2 million TV households. Limited carriage led to limited income, which led to the bankruptcy filing by four Comcast affiliates last year in an effort to prevent the Astros from retaking their broadcast rights after they were not paid for several months.

Tuesday’s hearing featured a report by Rockets CEO Tad Brown on his efforts to attract possible investors and additional carriage partners for the network. Brown said the Rockets have had talks with Fox Sports, Times Warner, DirecTV, AT&T, entertainment conglomerate AEG and private equity companies, including KKR & Co., Providence Equity Partners and Guggenheim Partners.

“We have some significant momentum,” Brown said.

But the report did not include speculation on if or when carriage deals could be forthcoming.

Judge lifts stays

Isgur agreed to extend until next month the Rockets’ power to seek new business for CSNH but also lifted a stay on two undecided motions in the case, the more significant of which is the Astros’ motion to dismiss the involuntary bankruptcy proceeding.

Attorneys will continue meeting this week to set timetables for evidence discovery and depositions on that motion, which is set to be heard Feb. 4.

Comcast also asked the court last September to name an interim trustee to oversee the network, but company attorneys said Tuesday that motion could be amended and might not be necessary.

Also still pending before the court is a lawsuit filed by Astros owner Jim Crane against Comcast, NBC Universal and former Astros owner Drayton McLane, accusing them of misrepresenting the value of CSNH when Crane bought McLane’s 46 percent share in 2011.